CAM High Yield Weekly Insights
(Bloomberg) Massive Package of Virus Relief, Federal Funding Passes Congress
- Congress passed the second-biggest economic rescue package in U.S. history as part of a massive year-end spending bill, concluding months of discord between Democrats and Republicans over how to address the pandemic that continues to surge across the country.
- In addition to funding government operations for the rest of the fiscal year, the legislation will provide aid for small businesses, supplemental unemployment benefits and $600 stimulus payments to most Americans and their children starting as soon as next week. It also includes money for schools, airlines and for distribution of vaccines.
- The Senate followed the House late Monday in passing by overwhelming margins the $2.3 trillion bill, just hours after lawmakers got their first look at the 5,593 pages of text. The White House has said President Donald Trump will sign it.
- Economists say the aid should be enough to avert a double-dip recession next year, though risks remain and both parties expect to be wrangling over addition relief measures after President-elect Joe Biden takes office on Jan. 20. Many of the aid provisions, such as the extended jobless benefits, will expire in the first quarter of next year.
- While the bill is smaller than many economists had anticipated months ago, it could be enough to ward off another contraction in gross domestic product.
- “This latest fiscal rescue package will add approximately 1.5 percentage points to annualized real GDP growth in the first quarter of 2021 and close to 2.5 percentage points to calendar-year 2021 growth,” said Mark Zandi, of Moody’s Analytics. “If lawmakers had not come through, the economy probably would have suffered a double-dip recession in early 2021.”